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Gold Holds As Equity Dead-Cat-Bounce Folds

Tyler Durden's picture





 

10Y Treasuries hit a 1.60% handle as yields fell without a bounce all day. Equities managed a post-European-close bounce (notably to VWAP and unable to break above it) off pre-FOMC levels but that faded rapidly into the close of the US day session as volume and average trade size picked up. VIX traded over 17% (up over 1.4vols on the day). Gold held up better than stocks - especially given the strength in the USD - and remains well above pre-FOMC levels (holding its bounce into the close). Of the major US equity indices, only the Dow remains green from pre-FOMC as CRAAPL sees its worse 3-day slide in 5 months dragging NDX down (and high-beta Russell dropping fast). MS and GS are down 4.2% from pre-FOMC levels now as Financials are the biggest losers (just trumping Energy and Industrials) from when Ben opened his book. Healthcare remains the clear winner. WTI dived into the EU close but recovered to close at $90 (-3% on the week) but in general risk-asset correlations with US equities are extremely high (with risk suggesting more downside to come).

 

Gold remains a solid winner post FOMC as stocks are now below those levels. The USD and Treasuries are tracking each other strongly...

 

The Dow remains green from pre-FOMC but the rest of the indices are fading...

 

Morgan Stanley and Goldman Sachs are suffering post FOMC...

 

Interestingly, commodities bounce off the European close dive was sustained (as opposed to stocks fading)...

 

 

Correlations across asset-classes are extremely high (lower right) and broad risk assets led stocks lower (upper right) from lunch onwards. ETFs held together (upper left) with some noise from VXX and HYG but that faded rapidly into the close. On a super-long-term basis, stocks remain significantly over-priced relative to risk-assets (though we do not use this to trade it remains a useful pre-ECB/Fed indication of status quo)...

 

 

Bottom-line - this kind of flow suggests end of quarter rebalancing as the relative outperformance of stocks has been extraordinary. It certainly doe snot suggest a pre-amble to high beta chasing (as we dismissed last week) or a QEternity-inspired risk appetite into Q4...

 

Charts: Bloomberg and Capital Context

Bonus Chart: How much further for equities? hhmmm, bonds say quite a way...

 

Bonus Bonus Chart: AAPL's 3-day 5% slide is the largest in over 5 months...

 


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Wed, 09/26/2012 - 16:26 | Link to Comment CPL
CPL's picture

Spot the PPT in action.

 

Eventually someone is going to just stop with the foreplay and just flash increase by typing a number.

Wed, 09/26/2012 - 16:29 | Link to Comment Xibalba
Xibalba's picture

Every single branch of Government, yes that includes the Presidents Working Group on Markets aka. the PPT, has been an utter failure.

Wed, 09/26/2012 - 16:31 | Link to Comment slaughterer
slaughterer's picture

Tomorrow will be vastly different.  Expect major change tomorrow.

Wed, 09/26/2012 - 16:32 | Link to Comment ATM
ATM's picture

Hope......

Wed, 09/26/2012 - 16:58 | Link to Comment Dr. Engali
Dr. Engali's picture

Isn't every day different? Life would suck if it wasn't. Btw....Looks like you're out an ounce. :->

Wed, 09/26/2012 - 17:29 | Link to Comment fuu
fuu's picture

JPM Hater said both days in RED.

 

slaughterer We will close GREEN today and tomorrow. QE4 is a 'coming

JPM Hater001 I have an ounce says both are red.

slaughterer Done!

Wed, 09/26/2012 - 17:56 | Link to Comment Dr. Engali
Dr. Engali's picture

Ah. My mistake. I look forward to seeing the outcome.

Wed, 09/26/2012 - 17:16 | Link to Comment RSloane
RSloane's picture

What major changes? Do I wear my Recovery Summer party hat? I think I still have it here somewhere.

Wed, 09/26/2012 - 16:28 | Link to Comment Nothing To See Here
Nothing To See Here's picture

These are not the economic recoveries you are looking for.

Wed, 09/26/2012 - 16:29 | Link to Comment SemperFord
SemperFord's picture

Regarding the second to last chart, I thought no crash was allowed until after the elections? I don' think Ben expected this big of a drop from Qeternity unless it is a BTFD moment for those still playing "the Market"

Wed, 09/26/2012 - 16:49 | Link to Comment CPL
CPL's picture

When you are fighting leveraged decay...well...there it is.

 

Painted into the corner

Wed, 09/26/2012 - 16:34 | Link to Comment Yardfarmer
Yardfarmer's picture

gold holds. hold gold. 

Wed, 09/26/2012 - 17:59 | Link to Comment disabledvet
disabledvet's picture

What else are holding tho? I agree...absolutely right. "Hold the gold." Those who told me to short silver this summer have just had their balls chopped off...AGAIN. I say anything that reduces costs...and by extension prices. There is no way that deficit does anything but stays high for a VERY long time. How does one successfully monetize and create a recovery then? No way you do it without healthy lending activity that's fer sure. And nobody lends with gold as their collateral. I say MASSIVE Army Divisions...and a new Aircraft Carrier Enterprise that is say...5,000 feet long by 2,000 feet wide.

Wed, 09/26/2012 - 16:34 | Link to Comment q99x2
q99x2's picture

The tungsten scare seems to have worked. Silver up for the session.

Wed, 09/26/2012 - 22:41 | Link to Comment andrewp111
andrewp111's picture

So which one will bounce higher when dropped off a building onto a concrete street.  A real gold bar or a gold plated Tungsten bar? I'll bet the tungsten bounces higher since it is a hard metal that will not deform. In fact, it might even shatter.

Wed, 09/26/2012 - 16:36 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Hey, where are all the grammar police calling out "doe snot" in the "Bottom Line" section?

Wed, 09/26/2012 - 16:46 | Link to Comment akak
akak's picture

What, deer don't get head colds too?

Wed, 09/26/2012 - 17:02 | Link to Comment IndicaTive
IndicaTive's picture

Um...that would be you.

Wed, 09/26/2012 - 16:36 | Link to Comment bank guy in Brussels
bank guy in Brussels's picture

Please Tyler & everyone

Stop using that horrid, ugly and cruel 'dead cat bounce' phrase - the witty and smart Tyler Durden can certainly think of something else clever

The phrase is painful to many of us animal lovers

Cats are among the world's wonderful creatures ... if you have never known the love of a cat you are deprived of one of life's great joys

Why use such cruel imagery in speaking of loving creatures who are like babies in our arms

Please do banish that awful phrase

Wed, 09/26/2012 - 16:43 | Link to Comment SemperFord
SemperFord's picture

Can we call it the cat daddy bounce?

http://www.youtube.com/watch?v=MCUnWIs88CQ 

Wed, 09/26/2012 - 16:45 | Link to Comment akak
akak's picture

Live cats bounce just as well, sometimes better.

Wed, 09/26/2012 - 17:10 | Link to Comment NotApplicable
NotApplicable's picture

Not to mention, they always land on their feet!

Wed, 09/26/2012 - 16:47 | Link to Comment I Am Not a Copp...
I Am Not a Copper Top's picture

Cats are assholes

Wed, 09/26/2012 - 16:48 | Link to Comment JustObserving
JustObserving's picture

4 million cats are put to sleep in US shelters every year.  That works out to be one every eight seconds.

I would not worry about a dead-cat bounce terminology if we are killing so many every year just in the US.

Would you prefer "Dead bankster bounce?" 

Wed, 09/26/2012 - 16:51 | Link to Comment Bastiat
Bastiat's picture

Yeah, that works.   Dead Bennie bounce?

Wed, 09/26/2012 - 17:13 | Link to Comment Kitler
Kitler's picture

Saw that behind the ski boat in "Weekend at Bernankes"

Wed, 09/26/2012 - 19:38 | Link to Comment chump666
chump666's picture

hahahahahaha

'dead ben bounce'

Wed, 09/26/2012 - 18:23 | Link to Comment delacroix
delacroix's picture

why aren't we selling all that meat to asia?

Wed, 09/26/2012 - 16:50 | Link to Comment EvlTheCat
EvlTheCat's picture

How does this suit you? We'll call it, 'brain dead PC Brussels idiot bounce' from now on?

Wed, 09/26/2012 - 17:06 | Link to Comment EvlTheCat
EvlTheCat's picture

Go ahead and try to impose your foul language fine here waffle boy. 

Wed, 09/26/2012 - 17:11 | Link to Comment magpie
magpie's picture

Maybe he's waiting for the dead animal quota directive from the EU commission.

Wed, 09/26/2012 - 17:20 | Link to Comment EvlTheCat
EvlTheCat's picture

Yes possibly, the bureaucratic EU arm of PETA is mired in red tape.

Wed, 09/26/2012 - 16:55 | Link to Comment CPL
CPL's picture

It's an english phrase.

 

The dead cat bounce.  If you don't like you can kick the dog.  Then choke the chicken.  Not too much though or people will think you are batshit crazy.  Especially if you go Ape over language.

Wed, 09/26/2012 - 17:31 | Link to Comment fuu
fuu's picture

?

Wed, 09/26/2012 - 19:43 | Link to Comment CPL
CPL's picture

He could also be having kittens over nothing. So everyone should relax and not have a cow.  Otherwise it'll get noisy as geese around here.

 

English language uses animals as adjectives.

Wed, 09/26/2012 - 17:08 | Link to Comment NotApplicable
NotApplicable's picture

The cat is already dead, so what exactly is so cruel about it?

Or are you just beating a dead horse?

Honestly, if you're going to go to this much trouble, you should've thought of more to add, that way, you could kill two birds with one stone.

Instead, your post is a dead duck (or perhaps a dead cat on the line?).

Wed, 09/26/2012 - 17:18 | Link to Comment RSloane
RSloane's picture

+100 to you, Sir.

Wed, 09/26/2012 - 17:24 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

When all else fails we can whip the horse's eyes and make them sleep and cry.

Wed, 09/26/2012 - 18:03 | Link to Comment disabledvet
disabledvet's picture

We like horses here too...

Wed, 09/26/2012 - 17:32 | Link to Comment EvlTheCat
EvlTheCat's picture

No, he is to busy running around from forum to forum topic, like a chicken with its head cut off, offering politically correct opinions.

Wed, 09/26/2012 - 18:24 | Link to Comment The Alarmist
The Alarmist's picture

Try beating the dead horse with the dead cat!

Wed, 09/26/2012 - 20:44 | Link to Comment Likstane
Likstane's picture

Try making a cat drink after digging it up and riding it to water the horse!

Wed, 09/26/2012 - 17:10 | Link to Comment blindchicken
blindchicken's picture

The phrase originates in sloppy thinking anyway.

If you throw a dead cat onto an inelastic surface it hardly will bounce.

I am too craven to present my alternative. Perhaps one could ask banzai to create a more proper image.

 

Wed, 09/26/2012 - 18:25 | Link to Comment The Alarmist
The Alarmist's picture

What I would be interested in seeing is if the dead cat rights itself during the fall.

Wed, 09/26/2012 - 18:44 | Link to Comment RSBriggs
RSBriggs's picture

Bullseye!  And that is the whole point....

Wed, 09/26/2012 - 22:51 | Link to Comment andrewp111
andrewp111's picture

It is actually a very apt phrase. An animal corpse dropped off a skyscraper will make only a small bounce when it hits the street - nothing even remotely comparable  to the height it was dropped from. A dead cat bounce is supposed to be a small temporary bounce. Now a really cold frozen chicken or turkey will bounce much higher. And I'll bet a bar or coin made from a hard metal like tungsten will bounce even higher still. So for bigger bounces, we can have the frozen butterball bounce and the fake gold coin bounce.

Wed, 09/26/2012 - 17:33 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

Some animal lovers would be less offended if the expression was changed to; "DEAD BABY HUMAN BOUNCE"

Wed, 09/26/2012 - 17:45 | Link to Comment EvlTheCat
EvlTheCat's picture

Probably the same "pet parents" who screw up their "animal companions" so much they have to take them to psychologists.

Wed, 09/26/2012 - 18:00 | Link to Comment disabledvet
disabledvet's picture

Vlad the Impaler it is then...

Wed, 09/26/2012 - 22:43 | Link to Comment andrewp111
andrewp111's picture

How about the Tungsten Bar Bounce?

Wed, 09/26/2012 - 16:49 | Link to Comment Rathmullan
Rathmullan's picture

The central planners have played their hands. The pastrami munchin coke heads responded to quad B's eternal easing like a 19 year old being told he will engage in a 3way everynight for the rest of his life. At first it's nirvana but then the rod starts a burnin. 

What's quad b to do now? Bump up bond purchases from a $40 billion monthly run rate to $50 billion? That'll go over as well as the iphone5. Or as wapo suggests tell us the the conditions for inflation and unemplyment under which he will stop easing? Every highschool kid at a charter school knows that's 3% and 5% respectively. Dow 11,000 by year end.

Wed, 09/26/2012 - 17:43 | Link to Comment PLove
Wed, 09/26/2012 - 19:42 | Link to Comment PiratePawpaw
PiratePawpaw's picture

Because. Next question...

 

Wed, 09/26/2012 - 21:41 | Link to Comment Jungle Jim
Jungle Jim's picture

I really, really wanted to buy some gold today. I might have gotten a pretty good deal on a quarter-ounce Eagle today.

But I was too busy trying to stop the nursing home from taking my Dad's house.

I might be able to save the house by buying it myself -- for its full "fair market value" (and then, of course, handing over the entire proceeds to the nursing home).

The only conceivable way I might raise that kind of cash would be to liquidate/sell for cash 100 percent of my physical silver. I might have to sell off some of my physical gold too.

I really need PMs to go up in market value a lot, and fast.

Try telling my creditors (the nursing home) that "patience is a virtue.

They're saying I'm a bit over $16k behind already. They're saying, "We want it all, and we want it NOW!!"

Plus, the meter continues running, at the rate of $5,700 a month, every month.

Also, I am in failing health myself, chiefly due to a total lack of access to any sort of medical assistance. No, it is NOT free to just go to the Emergency Room.

 I am pretty certain I have internal bleeding. The signs are pretty clear. Most of the time I feel I am about to fall on my face. Much of the time I barely know where or even who I am.

Maybe I should just "get a job." Yeah, then everything would be okay.

Wed, 09/26/2012 - 18:27 | Link to Comment The Alarmist
The Alarmist's picture

Must be killing the gang(sters) in Marriner-Eccles to keep pumping up equities before the close in the afternoon after staying up all night trying to find a reputable fake gold dealer to fill those bars and coins with tungsten to sap demand and keep the time-tested currency down.  Lots of Red Bull, no doubt.

Wed, 09/26/2012 - 19:04 | Link to Comment Alea Iactaest
Alea Iactaest's picture

Long Red Bull.

Wed, 09/26/2012 - 23:45 | Link to Comment hedgehog9999
hedgehog9999's picture

Everybody's going apeshit over a dead cat bounce expression, it is horseshit to complain about it as it is part of the beauty of the english language, any comments to the contrary are pure bullshit. I swear I heard it from the horse's mouth. It was raining cats and dogs over a week end I spent at a cabin where all I did was watch George Carlin videos and his masterful use of the english language in his comedy routines. I am cock sure he'd be rolling on his grave if he had access to this thread,

Thu, 09/27/2012 - 06:10 | Link to Comment DowTheorist
DowTheorist's picture

Gold holding its own is a clear display of strength. Gold is in a solid primary bull market as per Dow theory (it was signaled on August 22) Under Dow Theory primary bull markets are supposed to last on average more than 1-2 years. So we are talking of a powerful move,not just a "tradable" rally. If past experience serve us as a guide, we are talking of a price gain exceeding 40%.

Here are the details of this bull market in gold and its long term implications:

 

http://www.dowtheoryinvestment.com/2012/08/august-22-2012-new-primary-bu...

 

And for latecomers willing to join in who feel now may be too late, this may be interesting:

http://www.dowtheoryinvestment.com/2012/09/what-should-i-do-if-i-missed-...

 

Regards.

 

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